Mortgage rates today, January 23, plus lock recommendations

Gina Pogol

The Mortgage Reports Contributor

What's driving current mortgage rates?

Mortgage rates today are responding favorably to the compromise ending the government shutdown almost before it began. Typically, stock markets respond favorably to shutdowns, according to The Motley Fool. And rising stocks generally take mortgage interest rates up with them. But today, the shutdown is nullified, stocks are relatively flat, and lenders have pulled back on mortgage pricing.

Interestingly, the only loan rates that rose were government-backed programs. Post-shutdown, lenders should be able to increase their capacity for VA, FHA and USDA loans, and pricing may come down when that happens.

We have no financial reports that can potentially influence current mortgage rates. Look to financial data and stay in contact with your lender if you have a loan in process.

Financial data that affect today's mortgage rates

Today's early data appear:

Major stock indexes opened just slightly higher, pretty much a neutral thing (just slightly bad for rates, because rising stocks typically take interest rates with them -- making it more expensive to borrow )

Gold prices rose $5 an ounce to $1,337. (That is good for mortgage rates. In general, it's better for rates when gold rises, and worse when gold falls. Gold tends to rise when investors worry about the economy. And worried investors tend to push rates lower.)

Oil went up $1 to $64 barrel (slightly bad for mortgage rates, because higher energy prices play a large role in creating inflation).

The yield on ten-year Treasuries retreated 2 basis points (2/100th of one percent to 2.63 percent. That's good for mortgage rates because mortgage rates tend to follow Treasuries.

CNNMoney’s Fear & Greed Index remains at 78, the "extreme greed" level. That's bad for mortgage rates because in this case, greed is NOT good. "Fearful" investors push rates down as they leave the stock market and move into bonds, while "greedy" investors do the opposite. That causes rates to rise.

This week

This week brings very little financial reporting until later in the week. However, all eyes will be on Washington to see if they can get the government running or not.

Monday -- nothing

Tuesday -- nothing

Wednesday -- Existing home sales from the National Association of Realtors (NAR)

Thursday -- Weekly unemployment claims, new home sales, and Leading Economic Indicators

Friday -- Gross Domestic Product (GDP), durable goods orders

None of these reports, by themselves, have the ability to move markets that much. However, if they move in such a way as to create a trend, that's a different story. And we will follow that story for you, so stay tuned.

Rate lock recommendation

In general, 30-day is the standard price most lenders will (should) quote you. The 15-day option should get you a discount, and locks over 30 days usually cost more. If you need to hit a certain rate to qualify or make a refinance work, and you can get that rate today, I recommend grabbing it. Keep in mind that longer locks can cost at least .125 percent in FEES for 45 days or .25 percent in FEES (not the rate) for a 60-day lock.

I recommend waiting to see what happens before locking if I have the luxury of time.

LOCK if closing in 7 days

LOCK if closing in 15 days

LOCK if closing in 30 days

FLOAT if closing in 45 days

FLOAT if closing in 60 days

Video: More about mortgage rates

What causes rates to rise and fall?

Mortgage interest rates depend on a great deal on the expectations of investors. Good economic news tends to be bad for interest rates because an active economy raises concerns about inflation. Inflation causes fixed-income investments like bonds to lose value, and that causes their yields (another way of saying interest rates) to increase.

For example, suppose that two years ago, you bought a $1,000 bond paying five percent interest ($50) each year. (This is called its “coupon rate.") That’s a pretty good rate today, so lots of investors want to buy it from you. You sell your $1,000 bond for $1,200.

When rates fall

The buyer gets the same $50 a year in interest that you were getting. However, because he paid more for the bond, his interest rate is now five percent.

Your interest rate: $50 annual interest / $1,000 = 5.0%

Your buyer’s interest rate: $50 annual interest / $1,200 = 4.2%

The buyer gets an interest rate, or yield, of only 4.2 percent. And that’s why, when demand for bonds increases and bond prices go up, interest rates go down.

When rates rise

However, when the economy heats up, the potential for inflation makes bonds less appealing. With fewer people wanting to buy bonds, their prices decrease, and then interest rates go up.

Imagine that you have your $1,000 bond, but you can't sell it for $1,000 because unemployment has dropped and stock prices are soaring. You end up getting $700. The buyer gets the same $50 a year in interest, but the yield looks like this:

$50 annual interest / $700 = 7.1%

The buyer’s interest rate is now slightly more than seven percent. Interest rates and yields are not mysterious. You calculate them with simple math.

Gina Pogol writes about personal finance, credit, mortgages and real estate. She loves helping consumers understand complex and intimidating topics. She can be reached on Twitter at @GinaPogol.

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